Q

What are the PCI DSS compliance benefits of tokenization?

In this SearchSecurity.com Q&A, security expert Joel Dubin defines tokenization and discusses how the technology can help ease the burden of achieving PCI DSS compliance.

We've heard competitors talk about using something called tokenization to assist merchants with PCI compliance. What is tokenization, is it effective and how should we begin implementing something like this on our own?
Tokenization is a technology that enables a token to replace a credit card number in an electronic transaction. This token or reference number is meant to prevent the theft of the credit card number during electronic transmission and storage of a transaction. Since the reference number can't be used for transactions or fraudulent charges, there is little harm done if it's stolen.

The purpose of tokenization is to meet the Payment Card Industry (PCI) Data Security standard, which mandates that

credit card data can't be stored on the retailer's point of sale (POS) device or its databases after a transaction. This is one of the 12 points in the PCI DSS, which must be met by companies processing credit cards, including banks, retailers and merchants.

Many merchants have complained that in order to be PCI compliant, they will have to make expensive upgrades or replacements to their POS systems. Tokenization makes POS systems compliant without costly changes by using a 16-digit randomly generated number resembling a card number. The only numbers from the original card are its last four digits, which become the first four of the token. Using only these four numbers, the token is still PCI compliant.

Tokenization was invented by Shift4 Corp., which developed a driver for POS software to generate and accept tokens. The only thing merchants have to do is install the driver on their POS equipment. The driver is substantially cheaper than replacing or upgrading POS hardware to encrypt card numbers, which would otherwise be required for PCI compliance.

Is tokenization effective? For the time being, it probably is. Of course, eventually some clever hacker will probably find a way to beat the system. But right now it offers both PCI compliance and some level of network security -- the best of both worlds for merchants using credit cards.

For more information:

  • Learn how network isolation can boost a PCI compliance strategy.
  • In this tip, security expert Mike Chapple discusses how PCI DSS has changed and how these changes will affect compliance and business processes.
  • This was first published in July 2007

    Dig deeper on Security Token and Smart Card Technology

    Pro+

    Features

    Enjoy the benefits of Pro+ membership, learn more and join.

    Have a question for an expert?

    Please add a title for your question

    Get answers from a TechTarget expert on whatever's puzzling you.

    You will be able to add details on the next page.

    0 comments

    Oldest 

    Forgot Password?

    No problem! Submit your e-mail address below. We'll send you an email containing your password.

    Your password has been sent to:

    SearchCloudSecurity

    SearchNetworking

    SearchCIO

    SearchConsumerization

    SearchEnterpriseDesktop

    SearchCloudComputing

    ComputerWeekly

    Close